Question
B3 (a) The Finance Director of ABC Corporation intends to create a portfolio equally risky as the overall market by investing of the idle cash
B3 (a) The Finance Director of ABC Corporation intends to create a portfolio equally risky as the overall market by investing of the idle cash amount of $600,000. You are requested to provide advice with the information given below: Asset Investment Amount ($) Beta Stock X 144,000 0.96 Stock Y 180,000 1.38 Stock Z Risk-free asset ??? 1.68 ??? ??? Required: (i) Compute the percentage weights of Stock X and Stock Y of the portfolio. (ii) Determine the percentage weight and dollar amount invested in Stock Z. (iii) Determine the percentage weight and dollar amount invested in the risk-free asset. (2 marks)
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